Rumour has it that loyalty cards are no longer as adept as they used to be in keeping customers loyal. Various surveys published over the last few months have indicated that shoppers are keeping more points on their cards than they are redeeming, claiming to use them less frequently than they used to, and so on. So, why would this be? In an age where every penny counts – surely a loyalty card voucher or two through the post is a welcome sight? Let’s think about this for a moment…
Loyalty is, in essence, the mark of a strong, positive and mutually rewarding relationship between two entities. Yet, this doesn’t seem to come through strongly enough in today’s schemes as far as customers are concerned. Today, the value of the financial incentive offered in return for repeat purchasing at a particular retailer is hugely undermined by the plethora of other promotions and other coupons / vouchers that shoppers are constantly bombarded with… themselves working to drive promiscuity in a market where loyalty should be the ultimate goal. And this is only the functional argument. On the emotional front, where true loyalty plays, any notion of there being any kind of emotional currency in the relationship is challenged by shoppers’ increasing awareness that their ‘data’ is being used for marketing purposes. At best, the relationship becomes a transactional one (you pay me for my behavioural data) – its functionality eminently challengeable by the aforementioned promotional soup; at worst, it gets tarnished by concerns over integrity and trust with shoppers expressing concerns over privacy boundaries, and irritation with irrelevant offers that all too often demonstrate that the retailer doesn’t really ‘know’ them at all.
Over and above all of this, the complexity of today’s schemes can be off-putting. There are too many internet surveys to complete, too many ‘half personalised’ mailers to read, too many variations in terms of points redemption to be aware of… and frankly, too many shopping trips required to amass the points needed to feel truly rewarded or in any way emotionally aligned with the provider.
So what should retailers do? Throw out their loyalty schemes and start from scratch? No, that’s not what we’re saying. For loyalty schemes to regain lost ground, retailers need to find better, more engaging and ‘honest’ ways of using the data they collect to deliver worthwhile, personalised incentives for customers they wish to retain with their loyalty cards. And, they need to do this in a way that counteracts the challenges to loyalty they themselves are creating through over promotion and price wars.